Managing Lumber Price Volatility: A Smarter Purchasing Playbook

Managing Volatility With a Purchasing Playbook

Price swings hit more than just replacement cost; they test our gross margin stability, inventory value, and customer trust. We aren’t trying to beat the market—we are trying to reduce surprises and protect margin while keeping service levels high.

A 7-Part Playbook for Volatile Markets

1) Define "Buy Zones" We should remove the gut feel from purchasing by creating internal triggers:

  • Buy Ahead: When lead times extend and supplier increases are announced.
  • Buy to Plan: When availability is stable and forward demand is consistent.
  • Buy Hand-to-Mouth: When prices are falling fast or project starts are uncertain.

2) Separate Commodity from Program Inventory Not all stock is equal. We suggest tighter controls and faster review cadences for Commodities (SPF, OSB, studs), while prioritizing fill rates for Program Items to maintain contractor loyalty.

3) Tighten Your Cadence Volatile markets punish slow reviews. We recommend a weekly review of open orders, on-hand stock, and committed sales. Watching replacement cost vs. average cost ensures our margin doesn't "look fine" while reality is shifting underneath us.

4) Use Vendor Conversations as Early Warning In fast markets, supplier visibility is an advantage. We ask about mill run schedules and allocation risks. This is where the LBM Advantage model shines—gathering signals across a massive network to help us plan rather than react.

5) Build a Quoting Policy Contractors Can Live With Volatility creates friction at the counter. Set a consistent approach: 24–72 hour validity windows and clear "subject to market" language. This protects our margin and reduces rework for the sales team.

6) Don’t Let Accounting Hide Real Exposure Average cost can mask replacement cost pressure. We need a "rebought today" profitability snapshot for the top SKUs that drive 80% of our exposure.

7) Leverage Financial Hedging Tools For more advanced margin protection, consider how paper trades can offset physical price risks.

  • Lumber Futures: Standardized CME contracts used to hedge price risk by locking in a future lumber price, protecting against market price swings.
  • Basis Trades: We manage the difference between CME futures prices and localSouthwest cash prices, helping protect against freight changes and regional supply/demand shifts.
  • Lumber Swaps: Financial agreements that allow us to convert floating market lumber prices into a fixed price over a set period, without taking physical delivery through the futures market.

Put This Into Practice: Start by moving to weekly reviews on commodity categories and standardizing your quote windows. By combining physical inventory discipline with financial tools like swaps and basis trades, we move from reactive buying to proactive margin management.

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Price swings hit more than just replacement cost; they test our gross margin stability, inventory value, and customer trust. We aren’t trying to beat the market—we are trying to reduce surprises and protect margin while keeping service levels high. A 7-Part Playbook for Volatile Markets 1) Define “Buy Zones” We should remove the gut feel

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On some pages of the LBM Advantage corporate website we require the submittal of personal information including, name, address, phone number, fax number and email address. If you submit this information to us via our website, we may use it to send you information regarding corporate events, new LBM Advantage programs, etc.

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Last updated: January 28, 2025

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Kathleen O'Neill

In her role as Director of Risk Management, Kathleen O’Neill leads efforts to mitigate risks and ensure financial stability for the co-op. Her responsibilities include overseeing member credit and reload inventory levels, assessing the financial health of prospective members, and managing key financial instruments such as futures and swaps. With over 18 years of experience at LBM Advantage, Kathy brings a wealth of expertise in accounting, finance, and a comprehensive understanding of the co-op's operations. Her deep industry knowledge and strategic approach position her to play a pivotal role in safeguarding the financial health and long-term success of the organization.

Rodline Smith

Rodline Smith brings over a decade of accounting and leadership experience to LBM Advantage, playing a key role in upholding the company’s commitment to excellence in fiscal management. Before joining LBM Advantage, she served as Controller at AdWeek in New York City, where she developed expertise in navigating complex accounting environments. At LBM Advantage, she oversees all accounting functions, leading a team of accountants, specialists, and supervisors. In addition to managing audits, preparing and analyzing financial reports, and ensuring compliance with regulatory standards, Smith works closely with Chief Financial Officer Rich Kennealy to implement strategic financial initiatives that drive the company’s growth and operational efficiency.

Rich Kennealy

With over 25 years of experience in finance and operations, Rich Kennealy most recently served as Vice President of Product Finance and Analytics at Kaseya, a leading IT and security management software provider. Throughout his career, he has held executive roles at renowned organizations, including Red Hat, Qlik, Inc., and IBM, where he played a pivotal role in driving financial strategy and operational efficiency. Rich holds a Bachelor of Science in Environmental Engineering from Rensselaer Polytechnic Institute (RPI) and an MBA from Carnegie Mellon University.

Rob Andren

Rob Andren brings nearly 25 years of IT expertise and a decade of leadership experience to LBM Advantage, where he plays a key role in advancing the cooperative’s technology strategy. Before joining LBM Advantage, Rob served as Software Engineering Manager at Sunbird Software, where he led development teams in creating innovative solutions for data center infrastructure management. Prior to that, he was the Director of Information Technology at EXSIF Worldwide, overseeing global IT operations, infrastructure, and security for one of the world’s largest tank container leasing companies. Throughout his career, he has specialized in software development, IT strategy, cybersecurity, and process automation, driving efficiency and innovation within organizations. His expertise in leading cross-functional teams and implementing cutting-edge technologies has made him a valuable asset in optimizing business operations. Andren holds a Master of Science in Technology Management from Columbia University.

Joe Burlison

Joe Burlison is the Vice President of Southwest Operations at LBM Advantage, bringing decades of experience in the lumber and building materials industry. After earning a Bachelor of Administration from Baylor University, Joe began his career in retail lumber management before transitioning to Louisiana Pacific, where he oversaw mill sales and distribution in Houston, TX. His expertise in lumber futures grew during his time in a major energy company’s hedge program, leading to a 20-year tenure as a Southwest Regional Manager for a large building cooperative. A key driver of member acquisition and market expansion, Joe’s deep knowledge of the South-Central and Texas markets plays a vital role in LBM Advantage’s growth in the Southwest and beyond.

Making an Appointment

To make an appointment click the blue button on the “My Event” page of the virtual attendee hub.

Click Create Appointment at the Top Left Corner

Under Appointment Type Click Event Appointment

To Add Attendees you can scroll through the list or type in the search bar. Once you have clicked the attendees that you would like to invite to the meeting make sure to click the blue button at the button left of the screen

Then pick your time, add in a subject and description of the meeting and Send the appointment invitation by clicking the blue button at the bottom left corner of the screen.

**TIP** Make sure “Attendees can join this appointment virtually” is clicked. This is how the zoom link will generate in the invite

Once you’ve sent the meeting request, the recipient will receive an email like this. To accept or deny the meeting the recipient will be brought back to the virtual attendee hub solidify their decision.

After the appointment has been approved a zoom link will generate and you can add the meeting to your calendar. Zoom phone numbers are not provided as the system will not generate them, so you will need to use an alternate route in this situation.

I would still schedule the appointment and in the description of the meeting inform all attendees that you will be calling them or using an alternative approach.

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    Covid-19 Response

    June 25, 2020 – Update

    The impact of COVID-19 continues to be felt by individuals and communities around the country. We hope our industry partners are faring well. In accordance with state and local requirements, Advantage has taken steps to protect the safety of its employees. 

    Currently no more than 40% of staff is working in our offices at one time, with the rest working remotely. Additionally, if outside visits are necessary, they will be scheduled by appointment only.

    General employee business travel has been suspended, but limited essential travel is permitted for our Member Sales team.

    There continues to be no disruption to daily business activity, and communication to traders and support staff remains seamless. We will continue to post updates as this situation continues to evolve.

    Kellianne Lundgren

    Kellianne Lundgren is the Human Resources Director at LBM Advantage, bringing 16 years of HR experience with expertise in recruitment, employee relations, performance management, and compliance. She is dedicated to fostering a positive workplace culture that encourages collaboration, growth, and continuous learning. Kellianne began her HR career in healthcare before joining ENAP as HR Manager. In 2020, she was promoted to HR Director. Kellianne holds a Bachelor’s in Business and an MBA from Mount Saint Mary College, along with PHR and SHRM-CP certifications.

    Tim Johnson

    Tim Johnson is the Vice President of Forest Products at LBM Advantage, based in the North Carolina office. With over three decades in the building supply industry, he brings extensive experience in sales, operations, and business development. Tim began his career in 1991 with Front Royal Environmental Services, managing construction projects as an N.C. Licensed General Contractor. In 1997, he joined Moore-Handley, where he successfully tripled sales in Eastern North Carolina. In 2003, Tim joined IBSA, a cooperative buying group, and held various leadership roles before becoming President & CEO in 2011. Under his leadership, IBSA thrived, culminating in its successful 2017 merger with LBM Advantage.

    Bob Carson

    Bob Carson is Vice President, Southern Operations. Carson is considered a veteran of the lumber and building materials industry, having worked in it for over 39 years. He began his career in 1974 at Howard’s Home Care Center as a buyer. Shortly after, he was hired by Allied Building Stores Inc. (ABS) as Merchandising Manager. Carson had a successful career at ABS where he held several progressive positions such as: Vice President Building Material Development, Vice President Operations, Executive Vice President and Vice President of Strategic Planning. In 2009, he opened his own lumber wholesale company. Carson joined ENAP as Vice President in January 2012, while their new office was opening in Monroe, Louisiana, to help establish growth in the Southern territory. He currently oversees LBM Avantage’s Monroe office and development in the region. Carson received a bachelor’s degree in Business Management from University of Louisiana at Monroe.

    Glenn Canino

    Glenn Canino is Director of LBM Advantage’s Building Products Division. He facilitates daily operational and sales function among LBM Advantage’s four regional offices, as well as helping to spearhead the company’s overall growth initiatives. Canino has over thirty years of industry experience with a multi-faceted background that includes home construction, corporate finance and sales. He has been with LBM Advantage since 2003, initially working in the Hardlines/Specialties Department, then overseeing the Kitchen and Bath department. Canino became manager of the Millwork group in 2009 and then Director of Building Products in 2018. Canino holds a bachelor’s degree in Business Administration, focused in Finance with concentrations in Financial Analysis and Real Estate from California State University, Fullerton.

    Dave DeJoy

    Dave DeJoy became LBM Advantage's President & CEO on August 19, 2024. Prior to that, he served as the cooperative’s Chief Financial Officer since 2021. Dave began his career at IBM in 1990 working in the accounting department for IBM Asia Pacific in Rye Brook NY. Over the next three decades, he held various roles at IBM in accounting, finance, sales operations, marketing, and human resources, with the majority of his career in sales operations, supporting IBM’s software sales teams. Most recently, Dave served as Director of Sales Operations for IBM’s Worldwide Cloud and Cognitive Software division. In that role, Dave was instrumental in providing direction into business success through pipeline metrics, forecasting, and resource planning on a global level. Dave holds a bachelor’s degree in Finance and Managerial Accounting from Pace University and an MBA in Finance from Fordham University.

    Tom Molloy

    Tom Molloy serves as the Executive Vice President of Products & Programs at LBM Advantage. A highly respected industry veteran, he brings over 30 years of experience in the lumber and building materials cooperative sector. With deep expertise across all facets of a buying group cooperative—including retail operations, supplier relations, sales, and marketing—Tom is known for his strategic leadership and industry insight. His career began at ENAP in 1983, where he spent 14 years in the Building Materials Division, holding key leadership roles such as Vice President/Manager of Building Products and Vice President of Sales. In 1997, he joined Do-It-Best Corporation as Division Manager for Pro Sales–Lumber and Building Products. After nearly a decade, he returned to ENAP Inc., where he continued to build on his extensive industry experience. In his current role, Tom oversees all aspects of LBM Advantage’s Building Products Division, ensuring continued growth and success. He holds a bachelor’s degree in Business Administration and Marketing from the State University of New York at Oswego.

    Stephen Sallah

    Stephen J. Sallah retired as President & CEO of LBM Advantage on August 18, 2024. Sallah joined ENAP in 2008 as Chief Financial Officer and began serving as President & CEO in January of 2011. Prior to ENAP, Sallah worked at IBM for sixteen years. He began at IBM as an engineer and worked in various operational roles in Poughkeepsie, NY and Burlington, VT. After spending five years in semiconductor pricing and program management, Sallah spent ten years as division controller for the Software Group in Somers, NY. His last assignment was as program manager for the IBM Software Group supporting the group general manager in Mergers and Acquisitions. Sallah began his career in the U.S. Navy. He served as a Nuclear Engineer and Submarine Officer on the USS Norfolk out of Norfolk, VA; a fast attack Los Angeles Class Submarine. He served a total of seven years of active duty and completed his service in the Naval Reserves, retiring in 2004 as a Commander. Sallah received a bachelor’s degree in Mechanical Engineering from the University of Massachusetts at Amherst and his M.B.A. from Harvard Graduate School of Business Administration.
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    [tmm name="monroe-commodity-framing-panel"]
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    [tmm name="commodities"]
    [tmm name="millwork"]
    [tmm name="specialties"]

    Service Charge Schedule

    Advantage’s primary revenue source is derived from charging the member a percentage of the gross invoice amount based on the categories below. This service charge will appear on the transmittal unless the program is either deferred or non-adder.

    • Deferred:
      The service charge for deferred adder programs will be deducted from quarterly rebate statements and will not appear on transmittals. The service charge amount is set at 1% and a line item on the statement lists the amount being deducted. Each member has the option of declining the deferred adder and will be charged the 1% service charge on the transmittal.

    • Non-Adder:
      The service charge for these programs is not charged to the member.
    • Fixed Service Charge:
      A number of programs have a fixed service charge, regardless of the invoice amount.
    • Sliding Scale:
      If the program does not fall into the categories above, the charge will be applied per the following schedule:
    $0
    to
    		   $2,500: 3%
    $2,501
    to
    		 $40,000: 1%
            $40,001 and above is capped at $400